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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

Optimisim For South Asian Slums

There is a growing wave of urbanization in the developing world as the cities are drawing people away from subsistence farming to jobs in the industrial and service sectors. This rapid migration of people from rural to urban areas is causing massive increases in urban populations, creating more and larger urban slums, increasing the potential for environmental deterioration, and bringing tremendous pressures on city services already strained beyond limits. Take sanitation, for example, and it is no surprise that three major South Asian cities, Dhaka, Mumbai and New Delhi, show up on Mercer's list of the world's dirtiest cities. United Nations Habitat estimates that roughly 1 billion people -- or 33 percent of the world's urban population lives in slums. By 2030, according to the UN's human settlement program, that number is likely to double.

The slum dwellers struggle to survive with little clean water and sometimes no electricity around metropolises like Rio de Janeiro, Brazil; Mumbai, India; Lima, Peru; and Istanbul, Turkey. Their shantytowns are usually vast in expanse and dense in population. In Kibera, a slum near Nairobi, Kenya, for example, more than a million people live in an area about the size of New York's Central Park.

When visitors see a squatter city in India or Pakistan or Bangladesh, they observe overwhelming desperation: rickety shelters, little kids working or begging, absence of sanitation, filthy water and air. However, there are many benefits of rural to urban migration for migrants' lives, including reduction in abject poverty, empowerment of women, increased access to healthcare and education and other services. Historically, cities have been driving forces in economic and social development. As centers of industry and commerce, cities have long been centers of wealth and power. They also account for a disproportionate share of national income. The World Bank estimates that in the developing world, as much as 80 percent of future economic growth will occur in towns and cities. Nor are the benefits of urbanization solely economic. Urbanization is associated with higher incomes, improved health, higher literacy, and improved quality of life. Other benefits of urban life are less tangible but no less real: access to information, diversity, creativity, and innovation.

In a recent interview published by Wired Magazine, Stewart Brand, "the pioneering environmentalist, technology thinker", and founder of the Whole Earth Catalog focuses on the positive aspects of urban slums. Brand also makes a counterintuitive case that the booming slums and squatter cities in and around Mumbai, Nairobi, and Rio de Janeiro are net positives for poor people and the environment. Wired asked him to elaborate.

Wired: What makes squatter cities so important?

Stewart Brand: That's where vast numbers of humans—slum dwellers—are doing urban stuff in new and amazing ways. And hell's bells, there are a billion of them! People are trying desperately to get out of poverty, so there's a lot of creativity; they collaborate in ways that we've completely forgotten how to do in regular cities. And there's a transition: People come in from the countryside, enter the rickshaw economy, and work for almost nothing. But after a while, they move uptown, into the formal economy. The United Nations did extensive field research and flipped from seeing squatter cities as the world's great problem to realizing these slums are actually the world's great solution to poverty.

Wired: Why are they good for the environment?

Brand: Cities draw people away from subsistence farming, which is ecologically devastating, and they defuse the population bomb. In the villages, women spend their time doing agricultural stuff, for no pay, or having lots and lots of kids. When women move to town, it's better to have fewer kids, bear down, and get them some education, some economic opportunity. Women become important, powerful creatures in the slums. They're often the ones running the community-based organizations, and they're considered the most reliable recipients of microfinance loans.

Wired: How can governments help nurture these positives?

Brand: The suffering is great, and crime is rampant. We made the mistake of romanticizing villages, and we don't need to make that mistake again. But the main thing is not to bulldoze the slums. Treat the people as pioneers. Get them some grid electricity, water, sanitation, crime prevention. All that makes a huge difference.

The effect of urbanization in defusing the "population bomb" mentioned by Stewart Brand does make sense in Pakistan's context. With increasing urbanization, Pakistan's population growth rate has declined from 2.17% in 2000 to 1.9% in 2008. Based on PAI Research Commentary by Karen Hardee and Elizabeth Leahy, the total fertility rate (TFR) in Pakistan is still the highest in South Asia at 4.1 children per woman. Women in urban areas have an average of 3.3 children compared to their rural counterparts, who have an average of 4.5 children. The overall fertility rate has been cut in half from about 8 children per woman in 1960s to about 4 this decade, according to a study published in 2009.

In a recent interview with Wall Street Journal, Pakistan's former finance minister Salman Shah explained that "Pakistan has to be part of globalization or you end up with Talibanization". "Until we put these young people into industrialization and services, and off-farm work, they will drift into this negative extremism; there is nothing worse than not having a job," Shah elaborated. But increasing urbanization in South Asia represents both a challenge and an opportunity for India, Pakistan and Bangladesh. It is a challenge because it imposes a rapidly growing burden on the already overcrowded megacities such as Mumbai, Delhi, Dhaka and Karachi. Such a massive challenge will require a tremendous focus on providing housing, transportation, schooling, healthcare, water, power, sanitation and other services at an accelerated pace. But if this challenge can be successfully met, there will be an opportunity to develop the human potential of the rural poor and employ them more productively in the growing industrial and services sectors in the cities. In the case of Pakistan, if the level of robust economic growth, human development and increased urbanization can be sustained to significantly enlarge the South Asian nation's middle class, then there can be hope for genuine and durable democracy to thrive.

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Here are some excerpts of an NPR Fresh Air interview of Katherine Boo, the author of Behind the Beautiful Forevers:

.......Some inhabitants (of Mumbai slum Annawadi) lack any shelter and sleep outside. Rats commonly bite sleeping children, and barely a handful of the 3,000 residents have the security of full-time employment. Over the course of her time in Annawadi, Boo learned about the residents' social distinctions, their struggles to escape poverty, and conflicts that sometimes threw them into the clutches of corrupt government officials. Her book reads like a novel, but the characters are real.----------BOO: Well, I'll describe it (the slum) this way. You come into the Mumbai International Airport, you make a turn, and you go past a lavish Hyatt and a beautiful hotel called the Grand Maratha. By the time you get to the Hyatt, which is about three minutes in your car, you've already gone past this place.

There's a rocky road that goes into it, and you turn in, and the first thing you notice when you get into this landscape of hand-built, makeshift, crooked huts is one of the borders of the slum - or it was I came in 2008 - was this vast lake of extremely noxious sewage and petrochemicals and things that the people modernizing the glamorous airport had dumped in the lake.

And so it was almost beachfront property on this foul, malarial lake, and all around it in this, the single open space in the slum were people cooking and bathing and fighting and flirting. And there were goats and water buffalo. There was a little brothel, and men would line up outside the little brothel. And there was a liquor still.

And mainly there were families and children who were trying their best to find a niche in the global market economy. Almost no one in Annawadi had permanent work. Six people out of 3,000 last I checked had permanent work.-------------DAVIES: One of the most remarkable things to read here was that you tell us in the book that no one in Annawadi was actually considered poor by traditional Indian benchmarks. Is that right? I mean, if they're not poor, who is poor?

BOO: Go to the village, and you'll see what poor is. No, so officially, the poverty lines in many countries, including India, are set so low that officially the people that I'm writing about look like part of the great success narrative of modern global capitalism. They look like the more than 100 million people who have been freed since liberalization in India in 1991 from poverty.

So usually in my work, I'm not looking to write about the poorest and abject. I'm not looking to make you feel sorry for people. I want readers to have a connection more blooded and complex than pity or revulsion. But really, the main point I have to say is that on the books, these men, women and children have succeeded in the global economy. They're the success stories.

But I hope what my book shows is that it's a little more complicated than that.

DAVIES: Well, I mean, so many of them are just on the edge of losing, you know, food and shelter for the day. I mean, are the truly poor, are they rural poor who sleep out in the open? I mean, who are the...?

BOO: Well, many people in Annawadi sleep out in the open, too, but when Asha(ph) - in the book, I follow Asha, the mother, who has used politics and corruption to try to give her daughter a college education, I follow her back home to Vidarbha, a very poor agricultural region.

And when Asha walks through the door, everybody can see on her face and the face of her children how good life is in the Mumbai slums. Asha's grandmother walks on all fours, she's so bent from agricultural labor. And when Asha walks in that door, she stands mast straight.,,,

One reason for this may be that the rural poor choose to relocate themselves in the urban areas in the expectation that more jobs will be available in the urban economy. Economists call this the ‘push factor’ when poor economic conditions in the place of residence persuades people to move to the areas where there may be better prospects for finding jobs. Opposite to this is the ‘pull factor’ when it is known that better paying jobs are available in a particular geographic space some distance away from the place of residence.

The push factor is independent of the amount of distance travelled by those who choose to move out. Short distance migration especially in southern Punjab is an example of the push factor. One result of this is that poverty simply gets exported from one place to the other. Just by moving out, the migrants help those who remain behind. However, they bring down average incomes by moving into the urban areas that don’t have many opportunities to offer. This appears to have happened in the case of the southern districts of Punjab.

For some reason, those discouraged by their circumstances in the countryside as are the people in the southern districts of Punjab province, have preferred to relocate in the nearby towns and cities. They seem to avoid long-distance migration. There are, accordingly, relatively few people from these districts in the well-populated Pakistani diasporas in the Middle East, Britain and North America. A good example is out-migration from Gujrat district situated on the border of central and northern Punjab. The people from this district are to be found in many distant places. They constitute the bulk of the Pakistani population now resident permanently in Norway. I was once told by the Norwegian ambassador to Pakistan that one percent of her country’s population was made up of Pakistanis. In Oslo, the country’s capital, Pakistanis accounted for 10 per cent of the population. Most of these people were from Gujrat district.

Outmigration from Gujrat to Europe offers some interesting insights not only for understanding why people move but also of the choice of their destinations. Once it was appreciated in the district that migration was an important and effective contributor to poverty alleviation, people began to look actively for the opportunities that were available. The Gujratis took advantage of the path discovered by illegal migrants from North Africa to Spain to join this stream of migration. There is now a fairly large community in Barcelona of the people from this district.

Karachi’s growth, on the other hand, is a good example of the pull factor. Millions of people who have left their homes in such poor areas as the tribal regions of Khyber-Pakhtunkhawa (K-P) and the barani areas of north Punjab and Azad Kashmir and moved to Karachi. By doing so, they have generally improved their economic situation. They also help the places from which they come by sending back remittances. These have become important contributors to the incomes of the areas such as North Punjab and K-P. Although in its Punjab study the IPP did not do work on the impact of remittances on economic and social development, there is good reason to argue that this must have been positive.

Arif Hasan, widely considered Pakistan’s foremost urban planner, blamed much of the rise on speculation by developers, while urbanisation, infrastructure expansion and a recent economic revival have also helped push up prices.“Land is the new gold,” said Hasan, adding that at least 30 per cent of Pakistan’s urban population can only afford to live in areas considered “slums” or “katchi abadis”.“You cannot have a city like Islamabad without having a sizeable area for affordable low-income housing,” he said. “It is irresponsible at best and criminal at worst.” Designed by Greek architect Constantinos Apostolou Doxiadis, Islamabad was founded in 1960 to house the newly independent country’s bureaucrats.

Its wide boulevards and grid design set it apart from most South Asian cities, but also mean it offers little accommodation for the lower-classes who work as labourers or domestic servants for the well-to-do.Political activist Aasim Sajjad Akhtar said the poor were being unfairly penalised for not having the wealth or power to influence officials and claimed authorities were running a smear campaign against slum residents, most ethnic Pashtuns who have escaped unrest in the northwest and tribal areas.“They chose to demonise and criminalise the residents, calling them crooks and terrorists. They use their Pashtun ethnicity to create the idea they are terror sympathisers.” Authorities have rejected such accusations in the past.

Soon, one third of humanity will live in a slum. Our cities are at breaking point. Over 90% of urbanisation this century will be due to the growth of slums. By the end of this century, the top megacities will no longer be London and Tokyo; they will almost all be in Asia and Africa, and they will be far bigger than the metropolises of today. Lagos is projected to have a population of 88 million. Dhaka: 76 million. Kinshasa: 63 million. The world is fundamentally restructuring itself.

What if there were a new type of city that is a better fit for this century? One that is more lightweight, light touch and adaptive than we’ve seen before. What if the future of our cities could come from the rethinking of slums?

Sustainable. Walkable. Livable. These terms are often used to paint visions of our preferred urban future. Yet the formal notion of a city is quite calcified; it’s heavy and clunky and inflexible. Cities today lack the flexibility to absorb emerging radical possibilities. What good are new solutions if the system can’t absorb them?

City leaders across Asia and Africa are looking for solutions for their cities. What if they found them in the most unlikely of places: their slums? The informality of slums creates a white space from which a new vision for urban living could emerge – and that’s where the concept of microcities can begin to take root.

Slums don’t have to be a glitch, or a problem. They can be an asset. By considering urban living at the human scale, and from a bird’s eye view, we can redesign slums as more liveable, lightweight and adaptive places. Places that are a better fit for the modern world; places in which a diverse group of citizens can not just survive, but thrive.

What is a microcity?A microcity is a framework for urban reform. It has three core elements:

1) A microcity is a conversion of an existing slum.

2) It is a semi-autonomous, privately owned and operated Special Demonstration Zone (SDZ) for up to 100,000 inhabitants.

3) Each microcity is designed using integrated solutions. They are urban laboratories in emerging cities in Asia, Africa, and Latin America that will become testbeds for more agile approaches to healthcare, governance, education, energy provision and every other aspect of city life.

City governments will have three main roles to play. First, they can help identify the slum area to be converted. Secondly, they have to lay down the main arteries – the main roads into the area, along with the necessary infrastructure. Third, they pass a resolution establishing the microcity as an SDZ – a semi-autonomous area, similar to a Special Economic Zone, which becomes an innovation lab to test new forms of technology and governance.

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So what will a microcity look like – and what would it be like to live in one? A microcity will be a semi-autonomous area within its city, using a blockchain-based governance system that decentralises and automates much of its administration. It would feature a blockchain-based membership system, for example, that offers access to all key functions through member service hubs that become its inhabitants’ key point of contact for almost everything.

As well as connecting citizens, the microcity’s software would also work seamlessly together.

Imagine a healthcare system that takes care of 85% of people’s health needs through micro health clinics. Or a school system designed for the modern era, which focuses on project-based education. Or a food system that prioritises lab-grown food and industrial community kitchens, with a financial system that provides branchless banking. And, of course, free and fast wifi that connects everything and everyone.

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I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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